Whistleblowers

Yufen Chun 2020-02-18 6 min read {Academic writing} [lectures]

Prologue

Keymed (Medical & Industrial Equipment) Ltd v Hillman & Anor [2019] EWHC 485 (Ch) (11 March 2019)

The former CEO of Olympus, who blew the whistle in 2011 on a massive accounting scandal at the medical equipment maker, has won a London court battle over alleged wrongdoing linked to his £64 million (¥9.4 billion) pension.

Corporate Fraud

This perspectives article surveys publications in business history and constructs a conceptual framework for researching fraud and other dubious financial practices, their determinants and their consequences. The prevalence and nature of the practices studied are mainly determined by individual traits, firm governance and control, the economic environment, and regulation. Contemporaries make sense of dubious practices by constructing narratives, possibly framing them as scandals, which are likely to lead to attempts at regulatory change. It is primarily the socio-economic impact of dubious practices that determines whether regulation becomes fundamentally stricter. Existing agendas for reform strongly influence the substance of regulatory responses.

I examine the incidence of fraud from c.1720 to 2009 and relate it to the occurrence of significant financial scandals. Focusing on the UK, and US prior to Enron, and using a detailed dataset of significant events and news content, underpinned by examination of specific watershed scandals, the paper highlights the regulatory response to scandals and the implications for accounting and financial reporting. The evidence reveals the incidence of fraud and financial scandal to be historically contingent and skewed towards certain sectors, particularly banking and finance, facilitated by complex group structures and international capital mobility, and mediated by managerial incentives and ownership concentration. Financial reporting and auditing can mitigate fraud opportunities in all sectors and businesses without complex group structures, and the accounting profession achieved some success in this respect up to the mid-1970s. Since then, the profession has been increasingly challenged by, and to some degree implicated in, the development of interconnected and international business networks, which, combined with wider financial deregulation, has led to a resurgence of fraud and financial scandal not previously experienced since the mid-nineteenth century.

Whistleblower

He was Japanese corporate giant Olympus’s first foreign CEO - a feat that took Michael Woodford 30 years to achieve. But within months, the dream job turned into a nightmare.

Inside The Storm: Back from the Brink

“If the industry were a boxing match, we were some barely known upstart taking on Mike Tyson.” This is Haier CEO Zhang Ruimin’s story of how he saved the failing Chinese refrigerator company and took on one of America’s most iconic brands, General Electric

Japan Airlines was destined to collapse thanks to global disasters, the rising cost of flying and an over-indulgent leadership. Then enter a Buddhist monk - turned CEO whose modest management style achieved sky-high profits.

A dramatic turn of events for the man who saved auto giant Nissan from bankruptcy - chairman Carlos Ghosn has now been arrested and is set to be ousted from the company he helped turn around. Here’s the story of Ghosn’s rise to the top, before the fall.

Olympus made its mark in the world of photography in the 1970s. The company continued innovating with breakthrough products right till the 2000s. But then, an auditing scandal came to light, causing an internal crisis. How did Olympus overcome the odds?

Marvel is currently the undisputed superhero of the entertainment world. But just three decades ago, the company was on the brink of collapse and was in a war to survive. Former insiders give a rare glimpse into the inner workings of the Marvel Universe and how the company fought its way

Technology giant Philips was a force to be reckoned with, after making its name as a lighting provider. But fierce Asian competition, poor leadership and over-diversification nearly burnt its lights out. Inside access sheds light on how Philips innovated its way back to the top.

The ride-hailing industry is one of the most competitive in the world, but in Southeast Asia, Grab has won the battle. With unprecedented access inside Asia’s most valuable tech start-up, we find out how a hyper-local strategy made Grab the market leaders.

Thanks to squabbling management, unpopular products and a lack of direction, the world’s most famous company - Apple - was once weeks away from bankruptcy. We interview former executives to find out how Apple survived

With untrendy cafes, bad-tasting coffee and an insatiable thirst for expansion, the world’s biggest coffee empire was on the brink of collapse. How did one man retrain 135,000 baristas in order to save Starbucks?

Episode

I was falsely accused by an NHS whistleblower. It destroyed my career.

After more than a year, I was exonerated: “no case to answer”, the investigators said. The trust put out a statement saying that, while several people would face disciplinary action, one would return to work.

I understand the need to protect whistleblowers: I’ve written whistleblowing policies myself and I know how important it is to give people a safe way to report legitimate concerns. But the trust’s current policy allows people to lie maliciously about their colleagues without ever being held to account.

Even if whistleblowers are well-intentioned, there’s no support for innocent victims: I was treated from the start as if I was guilty, and when I was exonerated there was no effort made to restore my good name.

Future research

Bouter, Lex M., and Sven Hendrix. ‘Both Whistleblowers and the Scientists They Accuse Are Vulnerable and Deserve Protection’. Accountability in Research, vol. 24, no. 6, Aug. 2017, pp. 359–66. DOI.org (Crossref), doi:10.1080/08989621.2017.1327814.

Whistleblowers play an important role diagnosing research misconduct, but often experience severe negative consequences. That is also true for incorrectly accused scientists. Both categories are vulnerable and deserve protection. Whistleblowers must proceed carefully and cautiously. Anonymous whistleblowing should be discouraged but cannot be ignored when the allegations are specific, serious, and plausible. When accused of a breach of research integrity it is important to be as transparent as possible. Sometimes accusations are false in the sense that the accuser knows or should know that the allegations are untrue. A mala fide whistleblower typically does not act carefully and we postulate a typology that may help in detecting them. Striking the right balance between whistleblower protection and timely unmasking false and identifying incorrect accusations is a tough dilemma leaders of research institutions have to face.